Opinion
Civil Action 20-11402-MPK[1]
07-07-2023
SKINNER, INC., Plaintiff, v. LUCHENG LI, MAOLIANG FANG, Defendants.
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO RECONSIDER THE COURT'S ORDER ON THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT (#124).
M. Page Kelley, Chief United States Magistrate Judge
On March 3, 2023, the court dismissed on summary judgment defendants Lucheng Li's and Maoliang Fang's counterclaims for breach of the implied covenant of good faith and fair dealing (Counterclaim II) and for violation of Mass. Gen. Laws ch. 93A (“Chapter 93A”) (Counterclaim III). (#119 (the “Summary Judgment Order”)); see also #40 ¶¶ 63-85. The court allowed defendants' counterclaim for breach of contract (Counterclaim I), see #40 ¶¶ 49-62, to proceed to trial and denied defendants' cross-motion for summary judgment on all of plaintiff Skinner, Inc.'s claims. (#119.) Familiarity with the court's decision is presumed.
At the scheduling conference held on March 24, 2023, defendants informed the court that they intended to request reconsideration of the court's Summary Judgment Order and previewed their arguments. See #122. The court allowed briefing, see id., and defendants filed this motion on May 10, 2023, requesting that the court reconsider dismissal of their Counterclaims II and III, reconsider the court's denial of summary judgment as to Skinner's claims for breach of contract (Count I, against Fang; Count II, against Li), see #35 ¶¶ 40-47, and address in the first instance whether plaintiff is entitled to attorneys' fees under the terms of the Conditions of Sale (“COS”). (#124 at 1.) Skinner opposed. (#125.) For the following reasons, defendants' motion is denied.
I. Legal standard.
“A federal district court has the discretion to reconsider interlocutory orders and revise or amend them at any time prior to final judgment.” Davis v. Lehane, 89 F.Supp.2d 142, 147 (D. Mass. 2000); see Fed.R.Civ.P. 54(b). “The Supreme Court, however, has cautioned that ‘courts should be loath to reconsider orders in the absence of extraordinary circumstances such as where the initial decision was clearly erroneous and would work a manifest injustice.'” Echavarria v. Roach, No. 16-cv-11118, 2021 WL 4477433, at *2 (D. Mass. Sept. 30, 2021) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988)) (alterations incorporated and additional quotations omitted). A motion for reconsideration is thus an “extraordinary remedy which should be used sparingly,” Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st Cir. 2006) (internal quotation marks and citation omitted), and should only be granted when the movant demonstrates “(1) an intervening change in the law; (2) the discovery of new evidence not previously available; or (3) a clear error of law in the first order.” Davis, 89 F.Supp.2d at 147. “A disagreement with the Court's decision is not a basis for reconsideration.” Lyons v. Fed. Nat. Mortg. Assoc., No. 1:18-cv-10365, 2019 WL 1961072, at *3 (D. Mass. May 1, 2019) (citing Ofori v. Ruby Tuesday, Inc., 205 Fed.Appx. 851, 852-53 (1st Cir. 2006)) (additional citation omitted).
Defendants do not claim that there has been an intervening change in law since the court's Summary Judgment Order, nor do they bring to the court's attention new evidence not previously available. See generally, #124. Defendants argue only that the court made manifest errors of law in its Summary Judgment Order, see #119. See Davis, 89 F.Supp.2d at 147 (“When faced with a motion for reconsideration, a district court must balance the need for finality against the duty to render just decisions.”).
II. Reconsideration of summary judgment on defendants' breach of the covenant of good faith and fair dealing counterclaim - Counterclaim II.
By summary judgment, defendants had only two theories remaining to support their counterclaim for breach of the implied covenant: (i) Skinner agreed to modify its payment terms only to later change its mind without notice to defendants; and (ii) Skinner improperly included sales tax on invoices to defendants and refused to provide advice or information on how to remove it. See #119 at 35; see also #67 at 13-16; #124 at 2. As to defendants' first theory, the court held that there was no evidence in the summary judgment record that Skinner was attempting to extract a better deal from defendants, attempting to terminate the agreement to profit from a better deal, or otherwise engaging in gamesmanship. (#119 at 36.) On defendants' second theory, the court held that there was no evidence Skinner was attempting to force defendants to pay sales tax when none was required; the parties did not dispute that defendants did not provide the paperwork necessary to deduct sales tax until July 7, 2020; and it was uncontroverted that Skinner could not remove sales tax from the invoice without proper documentation. Id. at 36-37. Defendants thus failed to meet their evidentiary burden, and the court allowed summary judgment on defendants' implied covenant counterclaim. Id. at 38. Defendants now argue that in allowing summary judgment on their counterclaim the court made impermissible findings of fact in the face of contradictory record evidence, see #124 at 2, and misapplied Massachusetts law in its analysis of the elements of defendants' counterclaim, see id. at 3-5.
The court disagrees. As a threshold matter, defendants' motion is largely a “rehash[]” of the arguments set forth in its summary judgment papers, which is “not enough to merit reconsideration.” Davis, 89 F.Supp.2d at 147-48.
Even if the court reconsiders defendants' arguments, however, the court's ruling is the same. Defendants argue that, along with evidence of Skinner's purportedly dilatory communications as to the sales tax waiver documentation and confirmation of received funds, the issue of material fact as to waiver and/or modification entitles defendants to
at least a jury trial on the implied covenant issue, as the jury could find that Skinner waived the same-day payment requirement entitling the Defendants to pay late, accepted the late payments and prodded the Defendants to keep the payments coming. When it decided to cancel the sale, Skinner should have notified the Defendants that the waiver was being revoked, but instead instructed Defendants to make no further payments and canceled the sale without providing the Defendants an opportunity to complete its performance.(#124 at 3.) Defendants essentially articulate here their breach of contract claim, which the court allowed to proceed to trial. #119 at 43-44 (noting that the “material dispute of fact as to whether Skinner waived its rights under or otherwise modified the COS” “keeps defendants from winning [their breach of contract counterclaim] at this stage just as it does plaintiff”); see id. at 34-35. A breach of the implied covenant, however, requires at least “a lack of good faith” in performing the contract's terms. T.W. Nickerson, Inc. v. Fleet Nat. Bank, 924 N.E.2d 696, 704 (Mass. 2010) (“There is no requirement that bad faith be shown; instead, the plaintiff has the burden of proving a lack of good faith.”). In its Summary Judgment Order, the court held that defendants did not meet their burden to show any evidence of lack of good faith on Skinner's part that would support a breach of implied covenant, see #119 at 35-38. Defendants do not bolster their showing here with any new evidence.
Instead, defendants argue that the court made “impermissible findings of fact” when it held that defendants failed to meet their evidentiary burden. That is not what the court did. On summary judgment a court must review the record and determine whether a dispute of material fact exists; “[a] dispute is ‘genuine' if the evidence about the fact is such that a reasonable jury could resolve the point in the favor of the non-moving party.” Cherkaoui v. City of Quincy, 877 F.3d 14, 23-24 (1st Cir. 2017) (internal quotation marks and citations omitted). “‘Mere allegations are not entitled to weight in the summary judgment calculus'”; instead the “‘nonmoving party must . . . marshal sufficient evidence to show that a genuine issue of material fact exists.'” Lopez-Hernandez v. Terumo Puerto Rico LLC, 64 F.4th 22, 26 (1st Cir. 2023) (quoting first, Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 2 (1st Cir. 2010), then Cherkaoui, 877 F.3d at 24) (alterations incorporated). “Speculation” and “argumentation” are not enough at this stage. Id. (quoting Tropigas de P.R., Inc. v. Certain Underwriters at Lloyd's of London, 637 F.3d 53, 56-57 (1st Cir. 2011)) (internal quotation marks omitted). In its Summary Judgment Order, which decided cross-motions filed by both parties, the court reviewed the record in a light most favorable to the non-moving party-in this case, defendants-and, seeing no evidence and only argument as to Skinner's alleged lack of good faith, held that no reasonable jury could find in defendants' favor on the present record.
Defendants claim this was an error. They claim that Skinner's repeated “demands” for sales tax, “willful[]” refusal to respond to defendants' requests for information regarding sales tax, and “repeated[] refusal to respond to the Defendants even after Skinner received the proper documentation from Li” create a material dispute of fact as to whether Skinner was “attempt[ing] to force the Defendants to pay the sales tax.” (#124 at 5.) The issue for defendants is that there is no record evidence to support their argumentative language. There is no evidence that Skinner “demanded” sales tax, only that Skinner sent-in response to Mr. Li's requests-updated invoices that continued to include sales tax up to and one day past when Mr. Li sent Skinner the required sales tax waiver documentation; there is no evidence that Skinner “willfully” refused to provide sales tax waiver information; and there is no evidence that Skinner “repeatedly” refused to respond to Mr. Li after he provided the sales tax waiver information-there exists only one email in which Ms. Keane instructed Mr. Debourdes Jackson not to respond to Mr. Li pending an investigation into defendants' payments by the company's CFO, followed by numerous communications between counsel for defendants and Skinner, respectively. Other than defendants' arguments and allegations, which are not enough at this stage, see Cherkaoui, 877 F.3d at 23-24, there is no evidence in the record of a lack of good faith on Skinner's part. See #119 at 35-38.
Finally, defendants claim the court misapplied the law of implied covenants of good faith and fair dealing by requiring defendants to demonstrate bad faith or gamesmanship. They cite a number of cases for the proposition that “actions inconsistent with the expectations of the parties” are enough to establish a basis for a breach of the implied covenant claim. (#124 at 4.) All of defendants' cases, however, include a lack of good faith-evidenced by either gamesmanship or bad faith-or a material intervening change in circumstances that rendered the contract impracticable as written; none of the cases support a ruling in defendants' favor where there is no evidence that Skinner lacked good faith in its performance under the COS. Although defendants are correct that they need not show bad faith or gamesmanship to prove breach of the implied covenant, as their own cited caselaw indicates, either would be evidence of a lack of good faith, which defendants must show and on the present record do not.
III. Reconsideration of summary judgment on defendants' violation of Chapter 93A counterclaim - Counterclaim III.
In its Summary Judgment Order, the court held that there was insufficient evidence in the record to create a dispute of material fact that Skinner behaved deceitfully or with bad faith to support a finding that plaintiff violated Chapter 93A. (#119 at 39.) Defendants disagree and claim there is such evidence in the record. (#124 at 7-13.)
Despite defendants' minimal briefing on the issue at summary judgment, the court reviewed the record thoroughly in making its original decision, see generally #119. Although the parties clearly disagree as to who owed whom what amount under the terms of the COS, there is no evidence in the record of bad faith on Skinner's part that would support a Chapter 93A claim against it. See infra section V (discussing Skinner's entitlement to legal expenses under the COS); Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 56 (1st Cir. 1998) (“Where there is a good faith dispute over whether payment is actually owed, and that dispute is clearly articulated, it . . . appears there is no Chapter 93A liability.”); see also Physician Ins. Agency of Mass., Inc. v. Investors Capital Holdings, Ltd., No. 0303597, 2005 WL 3722373, at *4-5 (Mass. Super. Ct. Dec. 30, 2005) (same). Upon defendants' request, the court re-reviewed the parties' summary judgment briefing and the underlying record, and sees no reason to disturb its decision, see #119 at 38-39.
IV. Reconsideration of summary judgment on plaintiff's breach of contract claims - Claims I & II.
The court denied summary judgment on both defendants' and Skinner's breach of contract claims, holding that there remains a dispute of material fact as to whether Skinner waived or otherwise modified the terms of the COS to allow for late payments. (#119 at 22-24, 34-35, 4041.) Both parties' claims are thus headed to trial.
Nevertheless, defendants argue, as they did at summary judgment, that there is no material dispute of fact as to whether Skinner modified the COS, and so the court should rule in their favor and dismiss Skinner's breach of contract claim. (#124 at 14-15.) “Mere disagreement with a judicial decision,” however, “is not an adequate basis for reconsideration.” Heng Ren Inv. LP v. Sinovac Biotech Ltd., 609 F.Supp.3d 17, 19 (D. Mass. 2022) (citing Ofori, 205 Fed.Appx. at 85253). The court will not disturb its decision on these counts.
V. Attorneys' fees under the COS.
Defendants ask the court to consider and rule on their argument that Skinner is not entitled to attorneys' fees in this litigation under the terms of the COS. #124 at 13-14; see #88-1 at 26-27 (“The plaintiff argues its entitlement to attorney's fees in this litigation, but the relevant language in the Conditions of Sale allow for the recovery of Costs of Sale only.”). As the court recognized from the parties' summary judgment briefing, Skinner does not seek attorneys' fees and costs in this litigation under the terms of the COS; Skinner seeks such expenses in connection with its Chapter 93A claim. (#125 at 11-12.) The court already noted in the Summary Judgment Order that such claims are proper under the statute. (#119 at 42 n.28.)
It is unclear from defendants' briefing whether they also challenge Skinner's claim to legal fees “incurred in dealing with Defendants' lawyers pre-suit, investigating the need for a second sale, and the pre-litigation investigations as to the fraudulent and suspicious payments,” which, to the extent that those expenses do not constitute litigation-related costs, plaintiff claims would qualify as “costs of sale” under paragraph six of the COS. See #125 at 11-12; see also #91-1 ¶ 6. Defendants' arguments and cited authority all involve attorneys' fees and costs incurred in litigation, not business- or transaction-related legal expenses. See #124 at 13-14; #88-1 at 26-27, and cases cited. This issue is not yet fully briefed, so the court declines presently to rule on it.
VI. Conclusion.
For the reasons stated above, defendants' motion to reconsider the court's order on the parties' cross-motions for summary judgment (#124) is denied.